Being Smart

aka life

Down Payment

an initial payment made when something is bought on credit.

Closing Cost

Fees that are paid at the closing of a real estate transaction. This point in time called the closing is when the title to the property is conveyed to the buyer. Closing costs are incurred by either the buyer or the seller.

Mortgage Loan

A mortgage is a loan in which property or real estate is used as collateral. The borrower enters into an agreement with the lender (usually a bank) wherein the borrower receives cash upfront then makes payments over a set time span until he pays back the lender in full.

Buy Vs. Rent aka The Advantages and Disadvatages of Buying and Renting

Renting

Buying

Advantages

Disadvantages

More fixed costs for the
term of the lease

Variable costs

Not gaining equity,
but not losing it either

Equity may go up, down, or stay stagnant

When the lease is up,
you can just move

If you want to move, home generally must be sold

There is generally less work in maintaining a home or apartment

Work needs to be done by you--or paid for by you

Smaller amount of "up-front" cash

Generally a larger initial investment--the downpayment

Disadvantages

Advantages

No matter what happens with the value of the home, you will never gain equity

Over time, the mortgage balance decreases and equity builds, even if the value of the home does not increase

Limited--or no--ability to personalize
your living quarters

The ability to remodel and redecorate the home to match your needs and desires

No tax advantage to renting. Your landlord gets any and all tax breaks that are available

There can be tax advantages attached to home ownership. Consult competent legal and/or accounting advice for details for your situation